Gold futures in New York rose for a second straight day early on Wednesday on the back of a tumbling dollar, rising oil and the speculation that the US Federal Reserve may cut key interest rates again.
Traders also said that gold futures could move sharply higher on Wednesday due to skittish bets and decent trading volume before the US Thanksgiving holiday on Thursday.
"Oil and the dollar, no question. And the market now interprets that all the information is saying the Fed is going to cut rates. And lower rates mean cheap money," said Leonard Kaplan, president at Prospector Asset Management in Evanston, Illinois.
At 10:09 am EST (1509 GMT), most-active December gold on the Comex division of the New York Mercantile Exchange was up $6.60 at $798.00 an ounce, trading between $795.40 and a high of $808.00 in the overnight sessions.
Oil held just below $98 a barrel on Wednesday, after closing in on the $100 milestone as the dollar hit new lows and cold weather in the United States, the world's biggest fuel consumer, stirred anxiety over winter supplies. Gold is used as a hedge against oil-led inflation. However, US crude futures turned slightly lower by midmorning.
The dollar hit a record low against the euro for the second straight day and fell below 109 yen for the first time since June 2005 as global stocks slid. A lower dollar makes gold, which is denominated in the US currency, cheaper for holders of other currencies. Gold is often seen as an alternative to holding the greenback.
Spot gold was quoted at $798.40/799.20 an ounce, compared with $793.90/794.70 in New York Tuesday afternoon. London bullion dealers fixed the afternoon spot reference price at $798. Comex December silver was up 1.0 cent at $14.510 an ounce, trading between $14.465 and $14.825.
Spot silver was quoted at $14.47/14.52 an ounce, compared with $14.61/14.66 late Tuesday in New York. London silver was fixed at $14.55. Nymex January platinum dropped $6.70 to $1,463.00 an ounce. Spot platinum was quoted at $1,461/1,465. December palladium slipped $4.80 or 1.3 percent to $359.50 an ounce. Spot palladium was at $358/362.